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Demand
CH 3 Microeconomics | Class 11
Hand-written Notes
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 Microeconomics
Chapter - 3
Demand

* Demand
Demand is the
quantity of
→
a

that
commodity a consumer
at
is
willing and able to
buy
each
possible price during a

given time .

Elements
of demand are :

Time
Quantity Price
Willingness

* Demand Function
the relation between demand
It shows
functional
→

and its determinants

for a
commodity .

Dn =
f- ( Pa ,
Pee ,Y T F)
, ,
* Factors
Affecting Demand :

Price
1.

There
of given
is
commodity relation and
between
demanded
inverse
an
price quantity
of a
commodity .

Price related
2.
of goods
"

÷:÷:÷÷
increase

given comradely
in demand
and
of goods leads
deacuease in
to

price
a

y
of given commodity
and vice -
versa .

Eg : tea 4 toffee log :

-
Lea
Hangar .

Income
3 .

of consumer

a. Normal Goods
the then
If commodity reduces good
→
is normal
givenincome
a an
,

increase demand .

b
Inferiorthe Goods then
If commodity is
inferior good
→

increase in
given
income reduces
an

the demand and

,

vice
an

versa .

Tastes 4
Preferences
s .

A
change in the taste
preference of the
→
sudden
like
consumer
changethe in fashion etc .

directly influences demand .

 Future
h
change in
price
.

→
There exists a direct relationship between isdpectatiou

ofinchangethe in current
prices in
future and
change in demand

period .

* Law Demand
→
It states relationship
the inverse
between escpectation of change
in
pricesin
in
future and
demand in the
change
current
period .

* Assumptions of Law of Demand :

Price
si
of related
goods remain same .

2- Income
of consumer remain same .

There
• is no expectation of price change in
future .

4. Tastes 4
preference of consumer remains shame .

All the
s .
units
of the goods are homogenous .

G .

bommodity should be normal

good .

* Demand schedule

It is a tabular
presentation
that showing
the
different
quantities
the
of a
good buyers of
goods are
willing to
buy at
different
prices
time during a
given period of
.
* Demand curve :

The
graphical
→
reputation is
of called demand
a demand
function
buhve .

Individual Demand Schedule

Price ( E- 1kg ) Quantity demanded

Reference Point

20 6 A
30 5 B
40 4 C
50 3 F

Demand bwwe wheat

y of
50 F
q
g.

40 C
§
•
-

S so • B

20 • A

° 3
X
4 5 6

Atty of wheat demanded

 Reasons behind demand Curve :

si Law of DMU
It states that as the consumer has more and
its
more
of a
goods no
goes
on
declining .

a. Substitution effect
that
It means with
fall in
price of
relative
a
good ,

consumer
other
feels a rise in
price ofmore
demand goods ,
which
the
in turn leads to

for goods .

s .

Income effectthat
It means

real
with
fall in
price of good a
,

purchasing
's income
consumer or
power
rises
( normal
and he
)
demands more units
of goods
goods
4 .

Different uses
as
prices of who commodity falls
a ,
new consumer
the
class

appears ,

Thus
can

the total
now
afford
commodity
increases .
.

,
demand

Schedule :

Individual Demand Schedule Market Demand

Price
for wheat
QA QB Qa t QB
4 5
94
2
4 3
76
58
2 3
I 2 3
 s -
? ( Mahkftwwelemand )
n

I s
-
-

§ 4- .

2- -
D

' ' ' ' '

i
'
o
s y o s s a

oty demand →

* Expectations to law
of Demand :

Is Giffen goods kind

These are
special of inferior goods on
the
which
income
consumer
and their
spends
demand rises
large with
a
part of
an
his

increase
decrease
in
in
price and demand
falls with
price .

s . Status
relates
symbolto foods which
It certain
prestige goods are

used as status
symbols as their perries are

very high
Fear of
s .

shortage
the
Ifthen its demandescpect shortage of community
→
consumer a a

would start
is
increasing even

if the
price rising .
 Ignorance
4 .

bonsumeus
of higher
when
may buy price
→
more a

they are
ignorant of prevailing prices .

Fashion related
5-
goods
→

Good related to
their
fashion don't
demand follow the law
of
demand and rises when
they
even at
rising prices .

Quantity Demanded Ys demand

*
Change in
change in
 Erath

Increase in demand bupansion in demand is

is

shift
shown
-
by rightward shown
from a to B .

boutaaction in demand is
Decrease in demand shown
from A to c .

ifhiffhown by leftward

1.)
Contemporary
When
Goods

price of coffee increases :

E
DA
'

c c

§
G

'
O B B
Demand
of Tea
 When prices
D of
2
coffee decreases -
.

D -

O
of C '
C
to

G
-

&
D
D,

oty of tea -

* Substitute Goods
s When
price of petrol increase
.

E
.
'
B B

Demand of ban

When decreases
2
price of petrol
.
 "
§
•A

§ .
G
.

O B B'

Demand
of bar

* Price
Elasticity of Demand

Price elasticity of demand is defined as the percentage change in the

quantity demanded of a good or service by the percentage change in the
price. In other words, price elasticity of demand is the rate at which the
demand increases or decreases with the corresponding change in price.

= bhangeindemad-xiool.br
ange
demand

lharge in
price x too

original price

bhang in demand x
deigned price
bhang in
price deigned demand

-
x -